Only Four out of every 100 people who want to buy their first home can actually afford it, experts warned yesterday.

An incredible 96 per cent trying to get their first step on the property ladder cannot manage to pay the mortgage.

The crisis has sent the number of first time buyers plunging to its lowest level since 1980.

Many are being forced to carry on renting into their 30s by a combination of high prices, soaring interest rates and a barrage of fees, Britain's biggest lender the Halifax said.

And when they do buy, people are settling for a cheap flat rather than a terraced house.

Halifax chief economist Martin Ellis said: "Rising values have forced many first time buyers out of the market."

Kevin O'Sullivan, a 30-year-old office worker, had to club together with pal Simon Robinson, 24, to buy a £135,000 home in Chatham, Kent.

He said: "There's no way I could afford it myself. And I've only been in a few weeks and the value has fallen."

Britain's worst place to get on the property ladder was named as Henley on Thames, Oxfordshire.

Homes there cost an average £642,672 - 13 TIMES the average salary of people in the first time buyer bracket.

The cheapest place to buy is Bootle, Merseyside, where an average house costs £112,689 - 3.4 times the £32,749 a first time buyer earns. The problem is not just due to house prices. Changes in stamp duty rules mean two-thirds of buyers now have to pay one per cent on top of the price of their home because they are above the cut-off value of £125,000.

And mortgage interest rates have shot up five times in the past year, putting many potential buyers off.

Tories blamed Government stealth taxes and charges in the past ten years. They said they would cure the problem by cutting the stamp duty threshold for first-time buyers.

But Labour housing chiefs insist plans to build millions of newhomes will ease the crisis.

Critics say the expansion plans are a threat to the countryside. But housing minister Yvette Cooper said: "We need three million new homes by 2020. For 30 years this country has not been building enough to keep up with demand.

"Those who oppose new homes need to recognise the consequences for families."

The Royal Institute of Chartered Surveyors said there was hope on the horizon - because house prices are falling and repossessed homes will be coming on to the market.

A spokesman said: "There is huge pent-up demand. If prices drop in the early part of the New Year, many will pounce."

AVERAGE HOUSE PRICE BY REGION

North £116,223

Yorks & Humber £120,468

Wales £123,210

Scotland .£123,213

East Mids £126,392

North West £126,815

West Mids £133,967

East Anglia £156,502

South West £163,088

South East .£175,093

Northern Ireland £179,748

Greater London £288,615

Source: Halifax

365% - HOW LOAN GIANT HITS THE POOR

Struggling families are being charged skyhigh interest rates of up to 365 per cent by Britain's biggest doorstep lender.

Provident's 11,500 agents target the poor with small loans. But sometimes the huge interest is not spelled out.

A People investigator posed as a cash-strapped dad after getting a leaflet.

On Friday an agent called Jan arrived at the house in east London and in under 15 minutes had taken a few details, got our man to sign a form and handed over a credit card loaded with £300 - WITHOUT mentioning thewhopping 365.1 APR - annual percentage rate.

The loan was for £300 but the total charge for credit was a monster £165, making a total repayment of £465 over 31 weeks.

Provident chief executive Peter Crook, 44, who will enjoy Christmas at his £1 million mansion in Northampton, was paid £583,000 last year.

One of his customers, Denice Cunningham, 50, who earns £5,000 a year as a cleaner in Catford, London, wasn't aware she had to pay 365 per cent interest until The People pointed it out. She said: "The writing is so small you'd need a magnifying glass."

Provident spokesman John Moulding insisted their agents made borrowers aware of the cost.

He added: "Home credit is more expensive because we visit homes every week. Our lending is also higher risk with more borrowers likely not to pay the loan back."